Given the impact of prolonged financial pressure amid declining export revenues and limited access to borrowed capital, the Russian coal market could be approaching a stage of consolidation.
The consolidation phase may emerge in the next 1–2 years. The main scenario is the displacement of poorly capitalized companies and the redistribution of market shares in favor of sustainable export-oriented companies.
In January-April 2025, losses of Russian coal mining companies already amounted to more than 1.4 billion USD, which is equivalent to the value for the whole of 2024 at 1.41 billion USD. The withdrawal from the European market, falling global coal prices and sanctions had a particularly severe impact on small and medium-sized producers of thermal coal.
Supplies were redirected to China, India, and Turkey, where Russian companies compete with suppliers from Australia, Indonesia and South Africa, who have an advantage in terms of logistics. The sanctions regime increases costs and enables buyers to obtain discounts, reducing the competitiveness of Russian coal.
Coal consumption in Russia remains stable but limited (around 15% of the generation mix). Domestic coal prices are significantly lower than export quotes, making exports a key source of profitability.
Small and medium-sized enterprises are particularly vulnerable, as their resilience is further limited by high debt burdens.
One of the key challenges that affects the coal industry is the high level of debt. Currently, the volume of loans issued amounts to 15 billion USD and may spike to 17.5-18.8 billion USD by the end of 2025. At the current key interest rate, it is difficult to carry out mergers and acquisitions using debt financing.
The main mechanism for asset redistribution is non-core bankruptcies and the transfer of collateral to sound structures. Small assets may be bought out by large companies for nominal sums or on debt repayment terms. Thus, in the future, redistribution of the market is possible, including consolidation and partial monopolization of the industry.
The scenario of industry consolidation amid the phasing out of minor and unprofitable businesses can be assessed as probable outcome. Potential beneficiaries include major Russian coal producers and exporters. This could lead to the formation of a market structure, where several large vertically integrated companies will control the industry in the long term.
Source: CCA Analysis
The Coal Hub is an online platform for sharing analysis and information about the global coal market more info
Sign up to receive our weekly newsletter (each Monday) with new coal market reports, presentations & analysis.
By signing up, I agree to our TOS and Privacy Policy.
© 2020 TheCoalHub | All Rights Reserved
